At a meeting of eurozone finance ministers in Brussels tonight (16 November), the Irish government refused to ask for an immediate bail-out to help its struggling economy.
Although central bankers and finance ministers from elsewhere in the eurozone have been voicing concern about the possibility of contagion, Ireland still maintains that it does not need assistance from the EU.
But preparations for possible future support to the country’s struggling banking sector are “intensifying”, according to EU officials. Talks with the European Commission, the European Central Bank and the International Monetary Fund, which started at the weekend in Brussels, are now moving to Dublin.
Olli Rehn, the European commissioner for economic and monetary affairs, said he had been concerned about the divisive tone of debate of the past few days.
He added: “This evening I was relieved to perceive a sense of unity among the finance ministers.”
Rehn said: “The Irish are committed to working with the Commission, the ECB and IMF. There will be an intensification of the potential programme in case that is requested and deemed necessary.”
“We need to act in unity. It’s time for clear heads and clear determination at EU level and among the member states,” he said.
Jean-Claude Juncker, the chairman of the Eurogroup, said the eurozone member states would be willing to help if or when a request came, but the responsibility for that remained with the Irish government.
Juncker said he welcomed the “significant effort” that the Irish government had already made to meet the challenges it faces and expected its four-year fiscal plan to be presented shortly.
“We have full confidence that Ireland’s strategy to be announced at the end of the month will be thorough and detailed and will allow us to have full faith in dealing with the deficit by 2014,” he said.
Klaus Regling, the head of the European Financial Stability Facility (EFSF), the temporary fund created by the eurozone countries in May to provide money for any bail-out, said he had been speaking to potential investors around the world, particularly in Asia, and that funds could be available within five to eight working days.
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Shortly before the eurozone finance ministers began their meeting in Brussels, Ireland’s Prime Minister Brian Cowen told the national parliament in Dublin that speculation that his government had requested a bail-out was “ill informed”.
Cowen said that Ireland had made no application for external support. “Given the current market conditions, there have been on-going contacts at official level with our international partners,” he said.
He added: “The strategy being pursued by government has addressed the difficulties facing the banking system, is bringing sustainability to the public finances and is resulting in ongoing improvements in competitiveness. Pursuing these policies is essential for a return to growth, the evidence of which we are already beginning to see.”
Herman Van Rompuy, the president of the European Council, had earlier in the day warned that Europe was in a “survival crisis”. He said: “If we don’t survive with the eurozone we will not survive with the European Union.”